9a. BNG Annual Report BNG 2024.pdf

affected by the impact of other (poorly managed) risks. •

Counterparty risk: The risk that a borrower/counterparty will fail to make payments

affected by altered external expectations that are not well managed in the strategic process (strategic positioning risk).

The Exco is responsible for managing the reputation risk. Risk appetite

environmental, social and governance aspects in its business operations has a direct

as these factors significantly affect a company’s financial stability and future resilience. Therefore, within our credit analyses and rating methodologies we are increasingly

integrating the ESG criteria into the overall risk assessment as essential components. To manage ESG risks as part of credit risk, we focus on transitional and physical risks.

It is the ambition of BNG to be seen as a semi-public institution with excellent

Risk appetite

appetite in relation to our reputation is therefore minimal. See also the Compliance section

hedging currency and interest rate risk through derivatives transactions with financial

creditworthiness and an outstanding profile with regards to reputation and integrity. Our risk in this Annual Report.

Credit risk arises from uncertain activities, such as lending to the public sector,

counterparties, money market liquidity management operations and investments in the interest-bearing securities of issuers.

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The credit risks from lending are generally mitigated by government credit guarantees or by the Social Housing Guarantee Fund (WSW) and the Healthcare Guarantee Fund

Specifically for financial counterparties: •

(WfZ). The guarantee funds are guaranteed by the Dutch Government through backstops.

market value fluctuations of derivative positions. This is done both for derivatives that are

Focusing our lending on the Dutch public sector, which is inherent in our model, entails concentration risk.

accommodated via a clearing house and for bilateral derivatives agreements. •

Risk mitigation measures for the settlement risk include breaking down large payments and settling them sequentially and/or executing our part in the settlement after the

We run a settlement risk in the settlement of foreign currency issue transactions with

counterparty has already met its obligation.

financial counterparties. Due to the large size of these issue transactions, the settlement risk is potentially high. In order to mitigate this risk, we agree with the other parties on

Daily collateral netting takes place in order to mitigate the credit risk arising from the

the maximum size of the individual settlements, in accordance with the applicable internal

Market risk

part being provided after the previous one has been settled. In addition, the settlement

There are various forms of market risk: interest rate risk, currency risk, fluctuations in credit

limits. This means that large-scale settlements are processed in partial steps, with the next dates for new transactions with counterparties are spread over time to avoid unnecessary concentrations on one day in the future.

Market risk is the risk of loss of profit and capital as a result of fluctuations in market prices. and liquidity spreads and volatility risk. •

interest rates.

We determine the credit risk of a borrower or counterparty periodically based on a credit

•

arrive at limits per client. In addition to the periodic credit assessment process, the financial

•

and unlikeliness to pay indicators.

•

assessment. Internal credit assessments are performed for all of our borrowers in order to

•

interest rate instruments that operate under a principle similar to that of options (e.g.

risks and physical risks within the credit and liquidity spreads risk.

Periodic reassessment of the creditworthiness (credit review process) for all

•

Where possible, the bank makes use of guarantees from a central or local government or from the WSW and WfZ guarantee funds.

•

Within the market risk, as far as ESG factors are concerned, we are focusing on the transition

Risk appetite

borrowers/counterparties.

•

caps and floors).

Credit limits and targets: the limits and targets in the RAS are translated into limits that apply at the level of individual borrowers/counterparties.

•

Volatility risk: the risk of loss of profit or capital due to unfavourable movements in the implied volatility of market interest rates or exchange rates. This risk applies only to

report data are also used for this assessment. We use external rating credit rating agencies

To manage credit risk, we use the following mitigating measures:

Credit and liquidity spreads risk: the risk of loss of profit and capital due unfavourable spread fluctuations.

For financial counterparties and investments, external credit assessments and investor

Credit risk instruments

Currency risk: the risk of loss of profit or capital due to unfavourable fluctuations in exchange rates.

performance of borrowers is monitored continuously by tracking early warning indicators

that have been approved within the euro system.

Interest rate risk: the risk of loss of profit or capital due to unfavourable movements in

Other forms of collateral, such as mortgages and liens, to reduce possible losses due to credit risks.

We are applying a prudent approach to managing market risks:

The bank is covering interest rate risk positions in the banking book with micro-hedging or with macro-hedging. Micro-hedging is mainly applied to issues on the capital

markets and assets in the Treasury portfolios. The interest rate risk of loans to clients is managed by the Treasury and Capital Markets department, which allows efficient

hedging and flexibility for clients. The bank models the equity, so that the required return

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of the shareholders is achieved1, with an ongoing investment in 10-year paper of the

•

Dutch State. •

Cost of Hedging reserve. As these positions are held until maturity, the market value

We are closely monitoring the transition from Interbank Offered Rates (IBORs) to the euro

adjustments remain unrealised in this reserve. The regulatory review capital may be

short-term rate (€STR). BNG currently hedges the bank’s interest rate risk with 6-month

affected by this Cost of Hedging reserve in the event of market value adjustments, but

EURIBOR swaps and, in part, with €STR swaps. We see the IBOR transition risk as the main base risk, as the bank sees €STR as the risk-free yield curve, but mainly the 6-month

this risk is part of the bank’s appetite. •

EURIBOR interest rate risk position and, to a relatively limited extent, the 3-month EURIBOR interest rate risk position is open. We are actively working to increase the use of ESTR

We accept the risk caused by unfavourable fluctuations in the credit and

decide on the action to be taken. Levels for early detection are in place in order to start

economic capital.

We fully hedge against risks arising from value adjustments of financial instruments that may result from the change in an index, such as inflation, with index-related derivatives.

•

The bank hedges substantial currency risk exposures with derivatives.

Market risk instruments

In a number of market risk areas, we apply risk standards and limits: •

There is a limit on the total amount and monitoring takes place monthly.

These interest-rate risk standards are complementary and ensure the transparency and

liquidity spreads provided that this risk is explicitly hedged by sufficient allocated •

manageability of risks. Any breach of a limit must be reported to the ALCO. The ALCO will a dialogue about certain events which do not require immediate action by the first line and ALCO.

Liquidity risk

Liquidity risk is he risk of loss of profit or capital due to the possibility that the bank is at any time unable meet its payment obligations without incurring unacceptable costs or losses.

Liquidity risk can be broken down further into various subcategories (short and long term):

The Treasury and Capital Markets department has the mandate to maintain an interest

•

the capital limit for the Treasury Book daily by applying a number of internal parallel and

•

rate risk position in the Treasury book within predefined limited bandwidths. We monitor

•

We also ensure that the supervisory deviation criterion (Supervisory Outlier Test) set

by the regulator is not exceeded. The regulator uses the deviation criterion to express the maximum ratio between market risk and regulatory review capital. The deviation

Funding capacity risk: the risk that, as a consequence of its funding capacity, the bank will not be able to raise sufficient funds to meet its funding requirement over the long

Early warning levels have also been established for the internal Earnings at Risk scenarios. These ‘warnings’ are monitored monthly.

Short-term risk: the risk that the bank will not be able to raise sufficient funds to meet its payment obligations.

non-parallel interest rate shocks.

•

We allocate economic capital for interest rate risk, spread risk and IBOR transition risk.

swaps, to the extent that the market currently allows, and we are actively managing this risk. •

For cross-currency swaps, the basic spread risk is transferred on a daily basis in the

term, which would jeopardise the continuity of its business operations.

•

Refinancing risk: the risk that, as a consequence of our own creditworthiness, the bank

will have to raise financing or refinancing on the basis of unfavourable financing spreads that will jeopardise future profits.

criterion is a sensitivity analysis for both the Economic Value of Equity (EVE) and Earnings

Within the liquidity risk, the bank focuses on the transition and physical risks within the

shock scenarios, including the immediate plus or minus 200 basis points parallel interest

the ESG risk is not material for the short-term liquidity risk.

at Risk (EAR). It involves measuring the interest rate risk under externally prescribed rate shock.

1 The component of the required return that is related to the Euribor.

sub-risks of liquidity risk as far as ESG factors are concerned. The bank has established that

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Risk appetite

In order to meet our payment obligations at all times, including in stressful situations, we

pursue a prudent liquidity policy and the bank accepts liquidity risks at short notice only if there are sufficient liquidity buffers in return. The bank has a substantial liquidity buffer for this purpose.

The public sector largely consists substantially of institutions with a long-term investment horizon. This means that loans often have very long maturities. up to several decades in some cases. As there are no acceptable funding rates available for these long

related planned liquidity gap are tested in an unfavourable stress scenario for the LCR and NSFR ratios.

Most of the funding is obtained from international capital markets. We distinguish between

short-term and long-term financing. We maintain a number of issuance programmes that allow access to funding at competitive levels at any time. We are committed to proactive

relationship management with investors who support these efforts. The main currencies for the bank are the euro and the US dollar.

maturities, the bank attracts funding for somewhat shorter maturities and we accept a

We are aware of a number of funding sources. We use the following resources for short-

capital limits.

•

funding mismatch. This mismatch is monitored daily and is subject to strict liquidity and

term financing (money markets):

Commercial paper: The bank has a European commercial paper programme (ECP) of EUR 20 billion and a US commercial paper programme (USCP) of USD 20 billion. Under

Limits or warnings apply for a range of liquidity risk measures, such as the liquidity gap

normal market conditions, a significant margin is maintained between the maximum

analysis, liquidity stress scenarios, the Liquidity Coverage Ratio (LCR) and NSFR (Net Stable

size allowed by the programme and the actual use by the bank.

Funding Ratio).

•

Liquidity risk instruments

•

with the continuous maintenance of attractive, varied and sufficiently large issuance

We have the following programmes available for long-term financing (capital markets):

As a bank, we want to maintain continuous access to money and capital markets, together programmes for investors, because we want to meet the credit demand of our clients –

Unsettled repo transactions with interbank parties under a Global Master Repurchase Agreement (GMRA), where the bank's liquidity portfolio is used as collateral.

•

even in difficult times.

Deposits from institutional money market parties.

a debt issuance programme (DIP) of EUR 110 billion. ESG bonds are also issued under this programme.

•

In addition, liquidity buffers are required, so that we have access to liquidity intimes of

AUD 15 billion Kangroo-Kauri programme specifically for the Australian and New Zealand markets. ESG bonds are also issued under this programme.

market stress. The liquidity buffer is mainly formed from a cash position at the ECB, level 1

•

and known as the liquidity portfolio, and the ECB eligible interest-bearing securities and

•

high-quality liquid interest-bearing securities, which are explicitly held for liquidity purposes

Samurai shelf registration and Uridashi shelf registration, specifically for Japanese investors.

registered bonds (Namen-Schuld-Verschreibungen) (NSV), under German law.

loans deposit with the ECB . The management of the size and composition of this portfolio

•

least 100%. The bank also holds a large amount of collateral in the ECB deposit, allowing

We have a funding plan, in which the desired funding mix is described in detail. Part of

eligible interest-bearing securities and loans as collateral with the ECB, this collateral can

market. These large-scale issues by an issuer with a creditworthiness linked to the Dutch

is one of the liquidity measures taken to meet the external requirement for anLCR of at it to obtain short-term financing immediately. Since we, as a bank, can deposit ECB

be extended further in cases of prolonged stress. The size of the buffers is tested in the

liquidity stress tests, which are monitored monthly. Furthermore, the financing plan and the

private loan agreements under various legislations.

the funding plan is the annual issue in benchmark size to maintain a “GNH curve” in the

State ensure that we have a high profile among investors, allowing us to maintain access to investors, even in times of market stress. The actual realisation of this desired funding mix or

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the reason for deviating from this is monitored and evaluated by the ALCO, by means of a quarterly funding dashboard reported by Treasury.

Operational risk

Operational risk is defined as the risk of loss of income or capital resulting from deficiencies

Subtype

Definition

Process risk

the risk of failure or shortcomings of internal processes that support all activities linked to products, services, clients and transactions (change risk, legal reporting and tax risk).

HR risk

the risk of unintended human actions and deficiencies in capacity and personnel management.

Model risk

the potential loss the institution may suffer as a result of decisions that are primarily based on the output of internal models, due to errors in the development, implementation or use of such models.

ICT risk

the risk of the failure of hardware, software or the network used to support the activities in the business processes (ICT availability risk).

Data management risk

the risk of incomplete, inaccurate or inconsistent saving or processing of data, affecting the ability of the institution to provide services and produce timely and accurate (risk) management and financial information.

Outsourcing risk

the risk that the continuity, integrity and/or quality of activities outsourced to third parties or the equipment or staff provided by these third parties is adversely affected.

Legal risk

the risk associated with the possibility that contractual provisions are unenforceable or documented incorrectly.

of internal processes, people and systems, or from external events. Operational risk includes the following Level 2 risks:

Business continuity risk (incl. the risk of external events)

the risk of unplanned and negative operational, financial, legal, reputational or other material consequences arising from the complete or partial inability to continue to supply services within acceptable time frames and using the predefined capacity during a disruption resulting from the complete or partial failure of ICT (including cloud and communication systems), buildings, sites, key personnel or chain partners (IT continuity risk). External event risk: the risk of events beyond the direct or indirect control of the bank that could have an impact on the bank’s activities.

Information security (incl. cyber risk)

the risk of data loss/breach, unauthorised obtaining of data, or unauthorised access, use, disclosure, disruption, modification or destruction of data, ICT systems, endpoints or media.

Physical security risk

the risk of unauthorised access to or use of sites or buildings, unauthorised obtaining of equipment or physical damage or harm to equipment, personnel or visitors.

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Within operational risk, we focus on the transition and physical risks in terms of ESG factors.

Non-Financial Risk Management instruments

Risk appetite

•

We use a range of tools to manage operational risks:

Operational risks are inherently linked to the management of BNG. Although we strive to

a risk tolerance that is primarily focused on reputation and internal business operations.

ensure efficient and effective business operations, the mitigation of operational risks is

The bank’s exposure to operational risk is measured using Key Risk Indicators (KRIs),

based on the balancing of costs and economic benefits. We take a prudent approach

including limit, target and information figures. The KRIs relate to all categories of

to managing security risks and, therefore, do not accept security risks with a major

operational risk. The measured KRIs are compared with the risk appetite and reported

or critical impact. The risk profile in the area of operational risk is not yet in line with

the bank's risk appetite. Despite the current operational risk profile, according to NFRM,

Key Risk Indicators: The cascading of the bank’s risk appetite for operational risk results in

to the NFRC on a quarterly basis in the operational risk report. •

no additional management intervention is needed, as these observations are already

Risk Control Self-Assessments (RCSAs): The RCSAs are performed on the important

processes, with the second line playing a facilitating, but also challenging, role. The

sufficiently addressed in ongoing improvement programs and projects in the areas of ICT,

inherent and residual risks identified and the corresponding management measures are

Outsourcing, and BCM risk.

assessed at least annually, based on probability and impact scales. RCSAs are used

as input for our monitoring programmes and for testing the effectiveness of the most important control measures. •

Incident management: We record all operational incidents with a (potential) impact of EUR 5,000 or more. Process owners must carry out an analysis of the root cause

and initiate remedial actions. To prevent similar incidents occurring in the future, the

second line investigates whether adjustments are required to the process, the systems

and/or the working method. Significant incidents are reported to the NFRC, the Executive Committee and the Supervisory Board’s Risk Committee.

•

Scenario analysis: A scenario analysis of operational risks is performed annually.

These scenarios also provide input to substantiate the economic capital allocation for operational risk.

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There are developments in 2024 relating to the operational risk profile for the following risks: •

with the EBA requirements. The risk assessment process for outsourcing risks has also

Process risk (including changes): Long-term changes in the IT organisation and the

been reviewed thoroughly and a vendor and contract management application has

extensive change portfolio increase the process risk. Monthly reporting to the IPC and the Executive Committee by the project management agency provides insight into project

progress and the management of project risks. As a related management body, the IPC maintains an overview and insight into the manageability and prioritisation of our total change portfolio. •

HR risk: We have increased our capacity and skills through an expansion of internal

training and through the temporary hiring of external personnel. This is necessary in

order to implement the change agenda. We are increasingly successful in attracting

internally appropriate personnel within a reasonable time frame. The tight labour market, particularly in the IT area, remains a challenge. We use a personal development training

been set up to support the management of outsourcing arrangements.

•

Information security risk: In early 2024, BNG participated in an exercise organized

by the ECB, in which recovery after a cyber disaster was practiced. Following this

exercise, actions were taken to further optimize the cybersecurity processes. The security awareness of employees was maintained by means of a mandatory e-

learning program, phishing exercises and mandatory ‘seriousgaming’ sessions. New

employees are informed about relevant security topics during introductory meetings.

For a further explanation of the developments in digitalization, IT and cybersecurity, see paragraph 5.4.

portal to strengthen the knowledge and experience of our in-house staff. •

Data management risk: The first reports from the Data Insight 2.0 project went into

production to further improve the central data warehouse. The initiatives to make data measurable, including through the governance of Critical Data Elements and Business Data Attributes, have been successful.

•

ICT risk: Good progress was made in 2024 in setting up and strengthening important

control measures aimed at improving IT processes and mitigating IT risks. For example, IT Incident Management and Change Management have implemented an ITSM tool.

New software (an IAM tool) has been put into production to support the Logical Access

Security process. Management’s attention to adequate IT control and the strengthening of (IT) risk awareness has also been intensified further. To support a safe and modern

landscape, a target architecture is being used that ensures better coherence between Business and IT.

•

Business Continuity Management (BCM) risk: Management focus on BCM has been

increased and the coordination of the BCM process has been given a central position within the IT organisation. The BCM policy has been updated and elaborated. The

Business Impact Analysis (BIA) that was performed provides the bank with insight into its critical business processes and the IT systems that support them. The further expansion and testing of business continuity plans is in progress and will lead to better control of the BCM risk. •

Outsourcing risk: The Vendor & Contract Management department has expanded and

grown in terms of knowledge and maturity and the management of third-party risk has

increased. For example, the outsourcing policy has been updated and brought into line

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Redevelopment of American Roadhouse site in Zaltbommel Bazalt Wonen is redeveloping the former American Roadhouse site in Zaltbommel. The site, formerly an event centre, is being transformed into a residential and care area with rental and owner-occupied homes, a health centre, a branch of the Jeroen Bosch Hospital and care apartments for the elderly. The first phase was completed in 2024. We are funding the mid-range rental and non-rent-controlled homes (a total of 38 homes), which fall outside the scope of the Social Housing Guarantee Fund (WSW).

As a result, the financial risk lies entirely with us. This funding promotes housing market mobility and contributes to mixed neighbourhoods, which is in line with the social goals of Bazalt Wonen and the municipality of Zaltbommel.

With this funding, we are contributing to the creation of sustainable and accessible living environments. This helps tackling housing shortages and sustainability challenges.

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5.4 IT and cybersecurity Over the past year, our focus has been on strengthening our IT infrastructure and improving our digital resilience. We have taken important steps in the adoption of new technologies, including further migration to cloud-based solutions and the modernisation of our IT infrastructure. Our hybrid cloud strategy – a combination of private and public clouds – gives us the flexibility to work in a secure and efficient way. We have deliberately chosen to use software solutions offered via the cloud, as they are easier to manage and are more future-proof.

Cloud migration and infrastructure modernisation A major highlight of the year was the successful implementation of our integration platform, which lets us link applications flexibly. This platform makes our IT infrastructure more

efficient and less dependent on complex customised solutions. We have also developed

the digital workplace further, so that employees can work safely and efficiently, both in the

office and at home. Thanks to improvements in identity and access management, we have further secured access to systems, which is crucial for the resilience of our organisation.

These optimisations not only strengthen our IT infrastructure, but also contribute indirectly to

Compliance and cooperation in the chain To comply with legislation and regulations, such as the Digital Operational Resilience Act (DORA) and the NIS2 Directive, we have tightened our processes further. This includes

not only internal measures, but also closer cooperation with suppliers to manage risks

throughout the chain. This approach ensures that we meet the highest standards both internally and externally, with a special focus on our public-sector clients.

Innovation and AI With a view to the future, we are focusing on small-scale and concrete AI applications that

can be rolled out quickly within the organisation. Examples include applications that directly add value, such as automated analyses or support for day-to-day processes. A working

group is currently investigating which AI initiatives have the most potential, while also being manageable and secure. By implementing these applications step by step, we are keeping a grip on the risks related to privacy and intellectual property, while continuing to innovate and make our IT environment future-proof.

better support in the provision of services to our clients.

Resilience to complex threats Cyber threats are becoming more sophisticated and require an integrated approach

to their prevention, detection and response. Our CISO team has laid a solid foundation for the bank's digital resilience this year. In addition to technical measures, such as

detecting unusual behaviour more quickly, we have also invested in raising awareness

within the organisation. Thanks to bank-wide exercises and clear agreements about roles

and responsibilities, we are prepared for a range of scenarios and can respond to incidents quickly and efficiently.

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6. Governance

3 74

6.1 Corporate structure We are a public statutory two-tier company under Dutch law and provide all our services under the name BNG Bank N.V. Our shareholders are exclusively governments. Half of the bank’s share capital is held by municipal authorities, provincial authorities and one water board. The other half is held by the Dutch government. We receive no financial support from the government. As a systemically important bank at a national level, we are supervised directly by the European Central Bank (ECB). We are the fourthlargest bank in the Netherlands in terms of balance sheet total. We carry out our activities from our office in The Hague. Our size, structure, ownership and chain did not change significantly in 2024.

Business model Raising funding through

international money and capital markets

History In 1914, the Association of Dutch Municipalities (VNG) established the Municipal Credietbank. This bank gave municipalities the financial clout they needed to tackle social problems at a time of high levels of poverty and pressing social-social-societal issues. The Municipal

Credietbank grew into BNG. This original mission – contributing to societal solutions – is still at the heart of our activities.

Providing financing to the Dutch public domain at competitive terms and conditions

• • •

•

4th largest bank of the Netherlands Founded in 1914

Significant bank under ECB

supervision and national systemic bank

478 employees

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We provide financing to the public sector on competitive terms and for all maturities.

We continue to support our clients in difficult times, as well. Until now, we have always succeeded in this. More than 90 per cent of our loans go to or are guaranteed by

The regulations of the Management Board/Executive Committee and the committees can be found on our website.

government agencies. These loans, referred to as solvency loans, have a risk weighting

The Supervisory Board is the supervisory body as indicated in the Capital Requirements

the shareholding by Dutch governments and our focus on solvency loans, clients and

general course of affairs within the organisation. The members of the Supervisory Board

of 0 per cent. We also take care of payment transactions for our clients. Thanks to

partners see us as a safe bank. We have the highest external credit ratings (Moody's:

Aaa; Fitch Ratings: AAA; S&P Global: AAA). This provides us with a strong funding position on international money and capital markets. This position allows us to attract short and

long-term funding at low prices in different currencies . As a result, we offer our clients loans at low lending rates.

Directive. The Supervisory Board supervises the policy of the Executive Committee and the are appointed and dismissed by the General Meeting. The Supervisory Board has four committees that prepare the decision-making process: • • • •

Governance structure Our two-tier governance structure is comprised of a Supervisory Board (SB) and an

Executive Committee (ExCo). The Executive Committee has five directors, three of whom

Audit Committee Risk Committee

HR Committee

Remuneration Committee

The regulations of the Supervisory Board and its committees have also been published on our website.

are statutory directors. Together, they form the Management Board. The Supervisory Board

ESG policy governance

constitutes the management body with an executive function as defined in the Capital

The CEO is accountable for the strategy, including the ESG strategy. Management takes

general state of affairs and the continuity of BNG.

Executive Committee Sustainable Banking Committee (SBC) prepare proposals for changes

appoints and dismisses the members of the Management Board. The Executive Committee Requirements Directive (2013/36/EU). It is responsible for the day-to-day management, the

The Executive Committee has set up committees to provide consultancy or carry out specific tasks. These committees are: • • • • • • • •

Asset & Liability Committee

Credit Policy Committee

Credit Committee

Treasury Credit Committee

Non-Financial Risk Committee

Integral Portfolio Committee

care of the implementation of this. The Strategy and Sustainability department and the

in the purpose, strategy, ESG policy and ESG objectives. The Executive Committee decides on these proposals. The SBC ensures that BNG has, implements and reports on an

integrated sustainability policy. ESG factors with an impact on an existing risk are managed by the relevant ExCo committee. The Strategy and Sustainability department reports each

quarter on the progress of the strategy, including the material topics. Measuring the impact that BNG has through its clients is part of the ESG policy. This task lies with the Strategy and

Sustainability department. We report annually in our Annual Report on the impact on society through our clients. More information is provided in Chapter 2 of this report.

Sustainable Banking Committee

Client Acceptance & Review Policy Committee (“Policy CARC”)

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Stakeholders Our principal stakeholders are clients, investors, shareholders and employees. We invest in

long-term relationships by engaging with them regularly. We do this through consultations, regional meetings, sector meetings and investigations. These dialogues give us insight into their expectations and the value we can create for them. Stakeholders’ responses are used to improve our products, services and processes. We also consult with the

Client Council, a permanent group of about ten directors from different client groups.

We discuss strategic topics with them that are important for both us and our clients. We

organise annual meetings on current topics for municipal clients. We also make substantive contributions to meetings concerning real estate in the healthcare, education, municipal

and housing association sectors. We are a member of the Dutch Banking Association (NVB),

the European Association of Public Banks (EAPB), the European Banking Federation (EBF) and the International Capital Market Association (ICMA).

Subsidiaries and associates BNG Gebiedsontwikkeling B.V. is the only BNG subsidiary specialising in risk-based

participation in land development, process design and process guidance for municipalities and other public or semi-public organisations. In March 2018, the Supervisory Board of BNG

Gebiedsontwikkeling and the Executive Board of BNG jointly decided to hold off on initiating

any new activities or projects within BNG Gebiedsontwikkeling and to complete the projects in the existing portfolio over the coming years.

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6.2 Composition of the management body and organisation BNG is managed by a five-member Executive Committee (ExCo). The portfolios of the Executive Committee members have been allocated in such a way that the Three Lines of Responsibility policy can be fully implemented. In 2024, there were several changes in the composition of the Executive Committee. The vacant role of CCO was filled by the appointment of Peter Nijsse and Philippine

Risch was appointed as CEO on 1 October, succeeding Gita Salden. Early 2025, Jaco van

Goudswaard (COO) and Cindy van Atteveldt (CRO) annonced they will leave the bank. Irene van Oostwaard (former Head of Internal Audit at the bank) has been named CRO as from 4 March 2025.

Composition Executive Committee in 2024 Name

Gender

Year of birth

Nationality

Date of first appointment

Date of reappointment

Philippine Risch, CEO

F

1972

NL

01-10-2024

Olivier Labe, CFO

M

1969

Fr/NL

01-05-2015

01-05-2019, 01-05-2023

Cindy van Atteveldt, CRO

F

1972

NL

15-02-2021

n.a.

Jaco van Goudswaard, COO

M

1967

NL

22-06-2021

n.a.

Peter Nijsse, CCO

M

1969

NL

01-05-2024

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Composition of the Executive Committee as per 21 March 2025

Philippine Risch, CEO

Olivier Labe, CFO

Irene van Oostwaard, CRO

Vacancy, COO

Peter Nijsse, CCO

Is responsible for strategy &

Is responsible for financial reporting,

Is responsible for risk management

Is responsible for operations,

Is responsible for relationship

sustainability, communications,

funding and treasury, asset & liability

and compliance. She is chair of the

processing, data governance and

banking, lending, client services &

developing of the organisational

management, capital management,

Non-Financial Risk Committee, the

ICT and chair of the Integral Portfolio

payments and business strategy

and HR policy, the internal audit

investor relations, and legal and tax

Credit Policy Committee and the

Committee.

& control. He is chair of the Credit

department and the board secretariat.

matters. He is also responsible for the

Credit Committee Treasury and

Committee and member of

In addition, she is responsible for

back office and financial restructuring

member of the Asset & Liability

the Credit Policy Committee. In

general coordination and stakeholder

and recovery (special management).

Committee, the Credit Committee

connection with his position at BNG,

relations. She is also the chair of the

He is the chair of the Asset &

and the Client Acceptance & Review

he is a member of the Supervisory

Client Acceptance & Review Policy

Liability Committee and member

Policy Committee. In connection with

Board of BNG Gebiedsontwikkeling

Committee and the policymaker for

of Sustainable Banking Committee

her position at BNG, she is a member

B.V.

the Money Laundering and Terrorist

and the Credit Committee Treasury.

of the Supervisory Affairs Committee

Financing (Prevention) Act. She is

He is also a member of the Steering

of the Dutch Banking Association.

member of the Sustainable Banking

Committee of the Public Sector Issuer

Committee, the Non-Financial

Forum of the International Capital

Risk Committee and the Integral

Market Association and a member

Portfolio Committee. In connection

of the Board of Advisors of Agence

with her position at BNG, she is a

France Locale.

board member of the Dutch Banking Association. She is also a board member of the Stichting Princess Maxima Centrum Foundation.

2 79

Organisation chart as per 21 March 2025

Irene van Oostwaard

Vacancy

Philippine Risch

Olivier Labe

Peter Nijsse

Compliance 

IT Architecture & Data 

Human Resources 

Back Office 

Business Strategy  & Control

CRO

Carole Wishaupt

COO

Marcel Kroese

CEO

Monique Zandbergen

Financial Risk Management

Cloud & Infrastructure

Internal Audit 

Non-Financial Risk Management

Integrated Risk Management

Wouter Dikkers

Matthijs van Winden

Paul Kamerbeek

CFO

Marco Noordzij

CCO

Marleen Nieboer

Vacancy

Treasury / Capital Markets

Client Services & Payments

IT Control & Support

Communications 

Finance & Control  Sander Dijkman

Lending

Matthieu Vermeeren

IT Delivery 

Board Secretariat 

Financial R  estructuring & Recovery

Relationship Banking 

Klaas Veenbaas

Shek Gainda

Zenobie Verkijk

Security  Sanne Rog

Frederike Versloot

Aart Rietveld

Strategy & Sustainability 

Freya van der Kroef

Koen Westdijk

Arjen Smit

Leonie van Heusden

Rob Schreppers

Legal & Fiscal Affairs Monica Spiegel

801

7. Corporate governance statement

10 81

The internal risk management and audit systems are an important point of attention within BNG. The Risk Governance Framework forms the basis for all risk management

activities within our bank. It clarifies the principles behind the internal control and risk

relevant to the expectation that the company will be able to continue as a going concern for a period of twelve months after the preparation of the report.

management system. The Risk Appetite Statement describes the risks we wish to accept

In the opinion of the Management Board under the Articles of Association, the financial

discussed each year in BNG’s Annual Report. The process owners or department heads

or loss for the year of BNG and its consolidated subsidiaries. The Annual Report provides

in order to achieve our objectives. The various risks posed by the bank’s activities are

responsible for the primary and key supporting processes annually issue an ‘In Control

Statement’ to the Executive Committee, in which they highlight the risks in relation to the risk appetite, the management of risks and any deficiencies in this respect. All process owners or department heads provide ‘in control’ information in their quarterly reports. In addition, in the annual plans they explain how they aim to fulfil their responsibility to comply with

statements provide a true and fair view of the assets, liabilities, financial position and profit a true and fair view of the bank’s position on the balance sheet date, the performance

during the reporting year and the expected developments of BNG and its consolidated

subsidiaries, for which figures have been included in the consolidated financial statements. The Annual Report also describes the material risks facing BNG.

BNG’s risk policy. At various times during the year, the second line reports to the Executive

The Hague, 21 March 2025

the bank’s Capital Management Policy, which is periodically reviewed and discussed with

Management Board under the Articles of Association

Committee on compliance with the risk appetite. This overall framework is closely linked to the supervisory authority.

Audits by the Internal Audit department (IAD) are aimed at independently determining the design and operating effectiveness of the internal risk management and control systems.

Philippine Risch (CEO) Olivier Labe (CFO)

Irene van Oostwaard (CRO)

The external auditor audits the financial statements and evaluates internal control in

respect of the financial reporting insofar as relevant to an efficient and effective audit of

the financial statements. The findings of the IAD and the external auditor are reported to the Executive Committee and to the Supervisory Board. The head of the IAD and the external

auditor attend the meetings of the Supervisory Board’s Audit Committee where the financial statements are discussed.

The Annual Report provides sufficient insight into deficiencies in the operating effectiveness of BNG’s internal risk management and control systems. The aforementioned systems provide a reasonable degree of assurance that the financial reporting contains no

material misstatements. These systems alone are of course incapable of providing absolute assurance as to the achievement of the company’s objectives and the prevention of

all misstatements, instances of fraud and non-compliance with laws and regulations. A

detailed explanation is provided in the ‘Risk’ section of the notes to the financial statements. The consolidated financial statements have been prepared on the basis of the goingconcern principle. No material risks and uncertainties have been identified which are

82

8. Report of the Supervisory Board

5 83

8.1 Foreword The Dutch economy and society are on the move, driven by major themes, such as

Tightened strategy and solid results

can only be solved through intensive cooperation between various players in our society.

The Supervisory Board oversees the implementation of BNG’s strategy. This year, the

connection with other social parties, such as the government, municipalities, housing

firmly supports the “Bank of added value” strategy. In meetings with the Executive

sustainability, affordable housing, digitisation and social security. Complex social problems Contributing to social issues is, therefore, firmly embedded in the bank's strategy. The associations and healthcare institutions, plays a key role in this.

Supervisory Board was also closely involved in strategy formation. The Supervisory Board Committee (ExCo), we discussed the direction for 2024-2026, strengthening the focus on the public sector.

Driving sustainable investment

In 2024, BNG created clear social value, achieved solid financial results and secured funding

BNG has been a financial service provider for over a century that does more than just

This means that the bank is meeting a need for green, sustainable and social investments

provide credit. In 1983, for example, the bank played a role in the establishment of the Social Housing Guarantee Fund (WSW), through which affordable housing can be financed. More

recently, BNG together with the Association of Netherlands Municipalities (VNG) advocated

the creation of a guarantee fund for heat networks. At a meeting last year, the bank further mapped out the challenges surrounding heating networks. Thus, with its expertise and by

establishing new social connections, BNG contributes to finding joint solutions for the major task the Netherlands faces in the context of the energy transition.

at favourable rates. A significant part of this funding is raised through Sustainability Bonds. among (institutional) investors. The favourable lending rates for funding are an important

condition for making capital available to BNG clients at the lowest possible cost, so that they can achieve their social challenges at a low cost.

The Supervisory Board is satisfied with the bank’s performance. Solvency, liquidity and profitability remain at a healthy level, which underlines the bank’s strong position.

The role of BNG in the social dialogue and financing of heat networks underscores how

Impact of regulations and risk management

associations or innovations at healthcare institutions or waste processors, BNG is showing

At the same time, new regulations pose significant challenges for the financial sector. In

the bank is actively positioning itself in society. Whether it concerns municipalities, housing itself to be an engaged and decisive partner.

2024, the bank prepared thoroughly for the Digital Operational Resilience Act (DORA) and

the Corporate Sustainability Reporting Directive (CSRD). These developments not only have

an impact on our internal organisation, but also extend to our clients and the broader chain of stakeholders within which BNG operates. The Supervisory Board is closely monitoring the progress of these developments and is closely involved in, for example, decisions on the

double materiality assessment in the context of the CSRD. In addition, social developments, such as the ever-increasing threat of cybercrime, continue to place high demands on IT security. This topic has also been high on the agenda of the Supervisory Board over the past period.

84

New appointments in the Executive Committee and Supervisory Board

Moving forward with confidence

We are very pleased with the appointment of Philippine Risch as the new CEO. With her

from our employees. They have, once again, worked with great dedication for BNG and

experience in the financial sector and her ability to link strategy and execution, she is

the right person to strengthen the bank further. Her client-oriented approach and the

ability to connect employees will contribute to BNG's social added value. With her arrival,

the succession of Gita Salden has been completed. Gita led BNG expertly and with great

commitment over six years. She professionalised the organisation and strengthened the

bank's position in the public domain. We thank her for her vision and dedication, which have had a lasting impact on BNG, and wish her every success at De Nederlandsche Bank.

BNG is showing itself to be an engaged and decisive partner

A changing society and major social challenges demand a great deal of effort and flexibility its clients over the past year and we would like to thank them sincerely for this. Their

involvement with BNG’s clients and their expertise are crucial to the success of the bank.

We are convinced that BNG will face the future with confidence and enthusiasm and will continue to deliver added social value. On behalf of the Supervisory Board, Huub Arendse, Chair

The Hague, 21 March 2025

We also welcome the appointment of Peter Nijsse as our Chief Commercial Officer and

Irene van Oostwaard as our Chief Risk Officer (effective March 4 , 2025). Peter's in-depth knowledge of BNG and its clients makes him a valuable asset and contributes to the

continuity of the organisation. Irene brings extensive experience and expertise and will play a key role in strengthening our risk governance.

In addition, we welcome Marja Elsinga and Constant Korthout as new members within the

Supervisory Board. Their valuable expertise in the housing market and the financial sector, in particular, will strengthen the Supervisory Board further.

Finally, we would like to express our great appreciation for Cindy van Atteveldt (Chief Risk Officer) and Jaco van Goudswaard (Cheif Operational Officer) for their dedication over

the past years. Both made significant contributions to BNG's activities. We also extend our gratitude to Johan Conijn and Jan Rutte, who have served as supervisory directors for

eight years. Their commitment, collegiality and expertise as Supervisory Board members will be missed.

85

Renovation of the Sint Maartenskliniek The Sint Maartenskliniek in Ubbergen is a leading specialist in movement disorders, with expertise in orthopaedics, rheumatology, rehabilitation and pain management. Thanks to our funding, the hospital has renovated its care facilities, with a strong focus on the well-being of patients. The hospital not only provides physical care but also enhances mobility recovery and supports social participation. The renovation is creating a bright, green environment, with a new 52-bed nursing unit and advanced treatment rooms to support the healing process. The hospital’s renovation of the hospital presented several challenges. As the building is located on a hill in a wooded area, the renovation had to stay within the boundaries of the existing footprint. Meanwhile, the provision of care had to continue throughout the renovation. At the same time, the renovation offered opportunities for improved sustainability, including through heat pumps and solar panels. As partners, we actively contributed to assessing the social impact of the renovation. The result is a future-proof hospital where plenty of things are happening and that combines care and well-being.

86

8.2 Composition of the Supervisory Board and committees The Supervisory Board is composed of seven members and has extensive knowledge and experience of the markets relevant to BNG. The current or most recent principal position

held by each member of the Supervisory Board is listed on the following pages. Additional

positions held by the Supervisory Board members are stated in this Annual Report insofar as they are relevant. A register with all of the ancillary positions reported has been published

on the website. All of the Supervisory Board members are independent within the meaning of the best-practice provisions of the Dutch Corporate Governance Code.

The Supervisory Board monitors the policy of the Executive Committee, the way in which the Executive Committee implements the strategy and oversees general affairs within the company. In doing so, the Supervisory Board focuses on long-term sustainable

value creation for BNG’s clients and for society. The Supervisory Board also monitors

the effectiveness of the internal risk management and control systems, as well as the integrity and quality of the financial and non-financial reporting. Depending on the

situation, the Supervisory Board fulfils the role of supervisor, employer or adviser for the Executive Committee.

The Supervisory Board has four committees, namely the Audit Committee, the Risk

Committee, the HR Committee and the Remuneration Committee. The committees report verbally and in writing to Supervisory Board. If the approval of the Supervisory Board is required, the committee concerned gives consultancy to the Supervisory Board.

New members of the Supervisory Board follow an onboarding programme. This programme is adapted for each new member, as their knowledge and experience will vary. The purpose of the onboarding is to ensure that the new members have sufficient knowledge of BNG, its strategy and activities, so that the new members can fulfil their role.

In 2024, the attendance rate for the Supervisory Board meetings reached 100% (2023: 100%) and for committee meetings at 96% (2023: 90%). The combined attendance rate for all meetings was 98% (2023: 94%).

87

Huub Arendse (1958), chair

Femke de Vries (1972)

Karin Bergstein (1967)

Huub Arendse is former CFO and Executive

Femke de Vries is consultant in behavior,

Karin Bergstein is former member of the

Board member for the cooperative

culture and leadership and member of the

Executive Board of a.s.r. Nederland N.V.

insurance group Achmea. Chairman of

Supervisory Board of ABN AMRO Bank.

Member of the Non-Executive Board of Van

the Supervisory Board of Achmea Bank.

Lanschot Kempen, Non Executive Director at Chesnara and member of the Supervisory Board of UMC Groningen.

Composition of the Supervisory Board Name

Gender

Year of birth

Nationality

Date of first appointment

End of first term

End of second term

Huub Arendse Chair

M

1958

NL

18-04-2019

2023

2027

Femke de Vries Vice-Chair

F

1972

NL

22-04-2021

2025

Karin Bergstein

F

1967

NL

22-04-2021

2025

Marja Elsinga

F

1964

NL

25-04-2024

2028

Marlies van Elst

F

1966

NL

19-04-2018

2022

Leonard Geluk

M

1970

NL

22-04-2021

2025

Constant Korthout

M

1962

NL

25-04-2024

2028

2026

88

Marja Elsinga (1964)

Marlies van Elst (1966)

Constant Korthout (1962)

Leonard Geluk (1970)

Marja Elsinga is a professor Housing Institutions

Marlies van Elst is former COO ING Bank in

Constant Korthout was CFRO at Robeco

Leonard Geluk is chair of the Board of

& Governance at TU Delft and member of

Belgium and Poland and member of the

Group and Van Lanschot Kempen. He is

Directors of VNG (Association of Netherlands

the Supervisory Board of Ymere. She was

Operations & IT Management Team of

a member of the Supervisory Board of

Municipalities). Former alderman for Youth

vice-chair of the Board of Experts of Stichting

ING Group. She is chair of the supervisory

APG Group, ANWB and a member of the

and Education at the municipality of

Visitatie Woningcorporaties Nederland.

Board of Nederlands Hypotheken Fonds.

Supervisory Board of Blauwtrust Groep.

Rotterdam.

Composition of the Supervisory Board Committees and attendance Supervisory Board member

Supervisory Board meetings

Audit Committee meetings

Risk Committee meetings

HR Committee meetings

Remuneration Committee meetings

Total %

Huub Arendse

100%

100%

100%

100%

Karin Bergstein

100%

100%

83%

90%

Johan Conijn

100%

100%

100%

100%

Marlies van Elst

100%

100%

100%

Leonard Geluk

100%

100%

Jan van Rutte

100%

100%

Femke de Vries

100%

Marja Elsinga

100%

Constant Korthout

100%

100%

100%

Total

100%

100%

96%

100%

100%

100% 100%

100%

100%

100%

50%

100% 75% 100%

91%

100%

96%

89

8.3 Activities of the Supervisory Board The Supervisory Board met seven times in 2024. All Exco members attend Supervisory

Board member meetings. Prior to the meetings, there is a "private session" without the

ExCo. The fixed topics are financial information, progress on strategic projects, (commercial) developments in the various client segments, IT, operational progress, the budget, progress on implementation of the funding plan, corporate governance and HR-related topics.

• • • • • •

Developments at Centric FSS

Developments arising from ECB supervision Cyber resilience action plan

Selection of a new payment transactions supplier

Analysis of the Main Line Agreement of the new government Extension of Japanese shelf registration

The Supervisory Board has reviewed and approved the Annual Report 2024 and the

•

the General Meeting (AGM) to approve the annual figures and to grant discharge to the

The Supervisory Board received the information necessary to perform its duties. In addition,

in 2024.

took place twice per year. Employees from the organisation regularly attend topic briefings,

financial results for 2024. PwC audited the report and the financial statements. We convene Executive Committee and the Supervisory Board for execution and supervision respectively

In addition, the following topics were discussed at the Supervisory Board meetings in 2024: • • • • • • •

Update of the 2024-2026 strategy

Climate action plan

Update on CSRD progress and determination of the Double Materiality Analysis (DMA) Sustainability direction and targets IT roadmap

Prioritisation of projects to increase effectiveness

Quickscan of the Anti-Money Laundering and Anti-Terrorist Financing Act & sanctions legislation

• • • • • • • • • •

Update of the debt issuance programme and increase of limit (DIP)

it received information from the external auditor, with whom a confidential meeting also

which also introduces the Supervisory Board to senior management. This is important for the purposes of internal succession planning. In addition, there is an annual lunch with the entire Works Council, during which we discuss a current subject. In addition to the

updates on the various client segments, an outdoor day is organised every year, during

which Supervisory Board and the Executive Committee discuss the challenges they face with several clients from a segment. In that context, this year we were a guest at the

Municipality of Deventer and we spoke with various representatives from municipalities

and the grid operator Enexis about the dilemmas surrounding heating networks. It was an inspiring meeting.

Projects related to DORA

In addition, the Executive Committee and the Supervisory Board took part in two

Annual Report 2023, dividend proposal for 2023 and Pillar 3 report

strategic exposures.

Presentation of the Housing client segment

SIRA 2023

continuing education sessions. Cybersecurity & DORA was one theme, as well as non-

SREP letter 2024 from the ECB

Twice per year, two members of the Supervisory Board contact representatives of the

Filling the CCO vacancy and recruiting a CEO follow-up

also held with the supervisory authority about, among other things, the SREP (Supervisory

Budget 2025 and 2025 funding plan

Appointment of EY as the new auditor as from financial year 2026

Status of non-strategic exposures

Ministry of Finance as part of the government’s 50% interest in BNG. Regular discussions are Review and Evaluation Process).

Price model in relation to return on equity 90

The Supervisory Board values structural self-evaluation to learn from and become more

effective. In addition to evaluation at the end of a meeting, one self-evaluation is carried out per year. This is carried out once every three years by an external party. This took

place in 2022. The outcome of this self-assessment was discussed by the Supervisory

Board in a private session in 2023, after which the results were followed up in 2024. The

general picture that emerged from the self-evaluation is positive and an encouragement to continue on the path taken. The Supervisory Board intends to provide more explicit direction on the concretization of the strategy and to actively monitor the progress of projects. In

addition, the Supervisory Board will continue bilateral consultations with individual Executive Committee members. The Supervisory Board has asked the Executive Committee to give

extra attention to succession planning and fleet planning in the HR Committee and to pay attention to cultural and behavioural elements.

The Supervisory Board is also responsible for the evaluation of the functioning of the ExCo

and the assessment of the ExCo members. This is done using individual performance and development targets for each ExCo member. Discussions on the individual targets took place with all Executive Committee members in 2024.

There were no situations in which there was a conflict of interest. In order to maintain a focus on this, this is determined at the start of each meeting.

91

8.4 Audit Committee Composition and engagement

Recurring topics in 2024

The Audit Committee (AC) consists of Karin Bergstein (chair), Constant Korthout and

In preparation for the discussion by the full Supervisory Board, the AC dealt with the

and operating effectiveness of the internal risk management and control systems, the

•

Leonard Geluk. The committee supports and advises the Supervisory Board on the design

following recurring topics.

internal and external audit process, material considerations regarding financial reporting

and prospects in the areas of business, profitability, solvency, capital, liquidity and

and material risks and uncertainties of the company and its affiliated company.

funding, as well as progress on non-financial KPIs (so-called DSs) through quarterly

reports. In discussing the quarterly reports, the committee paid particular attention to the standard price, interest result, costs and result of financial transactions.

Working method

•

In addition to the members of the AC – including the chair of the Risk Committee – the CEO,

•

meetings, the chair shall speak separately with the head of IAS and with the external auditor. The AC met four times in 2024 and in one joint session with the Risk Committee.

The Pillar 3 Disclosure report for 2023 was discussed and submitted to Supervisory Board with positive consultancy. The interim report for 2024 was approved by the Supervisory

participate in the meetings of the AC. The chair of the Executive Committee is present at the the external auditor and the head of IAD prior to some of the meetings. Prior to the regular

the mid-year report 2024, after discussing the findings of the external auditor, the AC issued a positive recommendation to the Supervisory Board.

CFO and the CRO, the head of IAS, the head of Finance & Control and the external auditor

discussion of the Annual Report and half-yearly report. The AC holds a private session with

During the year under review, the committee was informed of key trends, developments

Board at the beginning of December.